Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Boris johnson seeks a december election and it is thrown into doubt as Jeremy Corbyn requests no deal brexit thrown out first. The eu decision on an extension is set to be delayed. A warning from barclays. The Bank Confirms its 2019 profit target, but jes staley tells bloomberg the outlook will be a challenge from here. Currenten the interestrate view across europe and the u. K. , now the u. S. As well and if we have economic profits, we need to put some caution against the 10 target for 2020. Anna and shipping costs invite. Drop as ares quarterly profit decline due to sameday delivery. Jeff bezos says it is a longterm plan. Good morning. Matt good morning. Lets take a look at futures this morning after amazon came a push forets say investment and growth over profits. The first time in two years we have seen profits drop over two years. Dax futures unchanged. As our ftse futures. Cap futures rising a little bit. No real indication as to what kind of day we will have an terms of futures. Lets take a look at u. S. Futures and see what we can get across the pond. They are all green arrows, but Dow Jones Futures really little changed as well. Sentiment dorisk you see in the gmm . Anna things look pretty mixed in the gmm overnight in asia. The session in terms of risk assets dominated by concerned about the amazon story. Reassessment of whether the market is interested in the profits or the investment. Many want both. That seems to be part of the narrative. We talked about this dichotomy with nokia a little bit earlier this week, as well. This is what we have handed over to us from yesterdays markets. Some of the asian equity session looking pretty mixed. The s p in the u. S. Over 3000. With that in mind, any sense earnings are not going to deliver seems to cause the market to question whether the market can really rally in from 3000. 3000 not all that far from alltime highs for u. S. Stocks. Add in the layer of geopolitical uncertainty, mike pence criticizing china and the way it has handled the hong kong situation. A lot of uncertainty for markets to deal with in geopolitics and trade and the earnings story, even as the earnings narrative has been a little bit more positive against much reduced expectations. Now to the latest on brexit, Boris Johnson called for a snap election on december 12 two end of the brexit deadlock. A motion will be put before lawmakers next monday, but Jeremy Corbyn said he will not back the snap election unless johnson promises to eschew a no deal brexit. Here is what the Prime Minister and the leader of the opposition had to say. Done isay to get brexit i think to be reasonable with parliament and say, if they genuinely want more time to study this excellent deal, they can have it, but they have to onee to a general election december 12. Take no deal off the table and we support an election. This country needs one in order to deal with all social injustice issues, but no deal must be taken off the table. Anna lets get the latest from the eu side without reporter who is standing by for us in brussels. We really want to know whether we are going to get a decision today and whether a decision is likely to come. You heard Boris Johnson calling for an election. The eu says, we want to know what the u. K. Politics wants. What can we expect in terms of the decision timeline . Good morning. I really hate to disappoint you, but we may not get an answer from the european side today. There is one thing european leaders hate and that is being dragged into u. K. Politics. Because there is no clarity on the election date, anything that they do would be seen as trying to stop the election or helping investors meet in brussels. Be two deadlines, one in midnovember, the other triggered, it has been gaining momentum, but they also do not want to make a decision until they get clarity from london and that is perhaps going to take us to monday. Election make the political calculus even more difficult . It makes it more difficult and it is not just about the terms for the extension, but the way we go forward. One of the things european leaders have said is they want clarity. They do have an incentive for this election to happen. I would point to the words of the French Ministry who said we could finally see the government in the u. K. In the u. K. Parliament speaking with the the voice and that means deal could go through. They see a nation that is very divided. Justalso point to this is the divorce. There is a very difficult tradeation in the future relation and this could also get complicated. Curveball that has been thrown to the European Union. All right. Brussels giving us the latest from the eu side. Give us the latest. What do you think of the latest brexit delay . What has the Market Reaction been . People are used to brexit delays by now, so they are taking of in stride. What we are seeing in the fx markets is just kind of watching for the development and the hesitation to trade off the back of the headlines that are rapidly changing. We have seen relatively reduced volatility in sterling following the Immediate Reaction from the announcement yesterday from Boris Johnson. Positioning for sterling weakness, further down the road, we are seeing a positioning indicator such as risk reversal favoring downside in sterling. We are seeing expectations for no deal lowered on the back of the developments in the past week. I think investors are kind of in a juncture where they are slightly more optimistic in terms of the brexit outcomes, but not necessarily willing to put too much money on the line based on their expectations on how things are going to develop. Anna good morning to you. We are going to talk to one of our guests about the link between the euro and the pound around the expectations around no deal. That seems to be crucial. Of market for the pound kind in limbo, waiting for the politics to clear up. Are we in a state of limbo . The latest line seems to have come from mike pence. I guess many in the markets are still waiting for the rollback of previously applied tariffs . Absolutely. I think people are still waiting for concrete developments to trade. Bithave kind of gotten a more positive indications, but nothing really concrete including no announcements of terror of tariff rollbacks being agreed upon. We are seeing a little bit of resilience and risk sentiment in general in regard to the trade story. It seems like the u. S. Stock market has taken a bit on. It seems that the narrative at the moment is the lack of any definitively bad news is good enough for the s p 500 and many other stock markets. Matt what about when you look at it from the earnings perspective . I think this is your mliv question of the day. What dangers lurk and guiding earnings outlooks down . Absolutely. It is kind of a sentiment within forward. Investors are aware that it is late cycle, it would be typical to see a little bit of disappointment in the earnings front and we have not necessarily gotten that. Forward guidance from the companies will be particularly important. I think what investors are really looking for are signs that the weakness is systemic. Amazon not really taking that much of a toll in equity sentiment today because investors can explain it away as idiosyncratic issues and not so much widespread issues in the tech sector. Really in equities in general. What they are really watching out for our signs that this is late cycle. We talk about companies in general regardless of sector that are uniformly guiding down and that can really take a toll on sentiments. Especially when people are willing to or eager to close the books for the year. We will see how this factors into those decisions heading into december. Anna thanks very much for joining us. Next, crash reports. Indonesian investigators find scores of problems in connection with the last years fatal ryan aircraft. We will bring you the details. Remember Bloomberg Radio is live on your mobile device or on Digital Radio and the london area. This is bloomberg. Back. Welcome this is the european open. Im matt miller in frankfurt and we are 15 minutes away from the start of cash trading and we are looking at a mixed sure in terms of futures. Lets get the bloomberg first word news because there is so much going on in terms of global headlines today. Lets go to london. Matt, thank you. Starting in the u. K. , Boris Johnsons bid for an early election next month has been thrown into doubt after Opposition Leader Jeremy Corbyn said his backing depends on the length of a brexit delay granted by the European Union. The eu is now planning to delay its decision on an extension to avoid getting caught up in westminster politics. Barclays is warning that low will make its tougher to hit targets next year after the Bank Reported cib revenue that beat analyst estimates. The ceo said 20 will be more challenging than it appeared a year ago. Jes given the current interestrate view across europe and the u. K. , now the u. S. As well, and if we have economic uncertainty, we need to put some caution against the targets for 2020. Crossing over to the u. S. , Vice President mike pence has criticized chinas actions against protesters in hong kong, calling for greater engagement between the worlds two biggest economies. Speaking in washington, he told demonstrators in hong kong, we stand with you. Hong kong is a living example when china happen embraces liberty. Years, for the last few beijing has increased its interventions in hong kong and engaged in actions to chris sale the rights and look to curtail the rights and liberties of its people. Is embarking on a fresh round of job cuts targeting employees in the middle east, north africa, and turkey, the latest move in their Cost Reduction program. We are told the Global Banking and markets and commercial Banking Units may bear the brunt of the reductions, which are due to start in november. Fulltimeys over 9500 staff in the region. Global news 24 hours per day on air and on twitter. This is bloomberg. Anna, matt. Anna thanks very much. Your first word news. Just another word on the updates we got from the chinese. The Chinese Foreign ministry speaking in beijing, responding to that mike pence statement we just played you, saying that mike pence and others are trying to smear and interfere in internal issues. Pence should focus on u. S. Internal issues such as racism. China pushing back in the u. S. Investigators have found an array of factors that led to last years fatal air crash ranging from certification failures by u. S. Regulators, as well as pilot error. Our managing editor for Global Business in asia has been watching this story. Just onethere was not thing at fault, but many. What does this mean for the aircraft involved and the extent to which boeing is culpable . Thats right. They have been working on this report for over a year. It has been over a year since the crash in indonesia. There were some 89 recommendations, but many of them did talk to boeings role in this and the faa, as the regulator that certified this plane. It came down to a couple things more broadly. Basically, the investigators in indonesia did not think this plane should have been certified because of the way a particular Flight Control system in the 737 max 8 responded. This is a sensor that points the planes nose downward when it senses that the engine is going to stall. The investigators in indonesia said that they had not looked enough into it when they certified it to judge how pilots would react. They did react differently because they were not trained enough in this particular system and this is just one of the many recommendations in the report that does put pressure on boeing with this grounded plane. Matt this is still a year later one of the most read stories in the terminal. Notstors really care about only the tragedy of the crash, but the impact on the business of boeing. It was their best selling plane. When are they going to be able to get this aircraft back up there and our customers going to want to fly it . Around the world have indicated that this is very unlikely that the 737 max will be back in the air before the end of the year. Early next year is the optimistic scenario. The faa really is going to need to convince airlines to buy this fly, that it is safe to particularly when you have things like this ryanair crash report, which is out formally and a little bit of time, pointing the finger at a certification process not being adequate when it came to particular functions of this plane. We are hearing they might have to install some soda monitor on this particular sensor that might cost around 15 million per plane, but the bigger indications are there when you have the biggest selling plane grounded for this long of a time. Anna thank you very much. Minutes away from the start of the European Equity trading day. We will take a look at stocks we are watching ahead of the open. It will be more challenging to meet those targets. This is bloomberg. Matt welcome back to Bloomberg Markets. Six minutes until the start of cash trading across europe. Lets get a look at some of the stocks you are going to want to watch. Dani burger is looking at ab invev. Also covering ubisoft. Annmarie is covering barclays. Annmarie it was a Strong Performance at the start. Corporate and Investment Banking revenue beat the street. They did confirm their targets, but they did flag that these targets are getting much harder to reach giving the uncertainty like brexit and the low interestrate environment, so that is something to watch. Anna we will keep our eye on barclays. Sam, ubisoft. Some damaging opening calls here. Ubisoft has moved a couple of their major games into 2021, causing a major downgrade for 2020, shares hit very hard postmarket in germany and we are expecting a similar drop in france in just a little while. Matt all right, finally, what is the story with ab invev . Dani Third Quarter orne in earnings ground to a halt. The forecast was downgraded for the fiscal year. We are seeing shares call down as much is. Less orders in china and the u. S. Hard seltzer sales bit into beer consumption. Anna thanks very much, everybody. If you want all the stocks stories, that is the function to use in your bloomberg. The sun shines over london. U. K. Politics to the fore and the market open next. This is bloomberg. Anna a minute to go until cash equities trading. We go towards the last trading day of the week in europe. Pretty flat, not that far on the asian session. Concern around the earnings season and the earnings from amazon focus on investment rather than profitability. Markets are trying to work out what that means. U. S. Futures point a little higher, but not expecting any leaps at the start of the trading day. A little momentum to the upside. The pound not that far from 1. 28. We have dropped down a little from yesterday after jeremy johnsonsied boris request for a december 12 election. We will see what comes back from the eu in terms of timing of the extension. We are expecting to be flat to positive across the European Equity markets. We have had earnings reports in europe, not just the amazon story, that is part of the narrative. We talk about barclays, ubisoft, ab inbev. 20 of potential for big moves on individual stock names. 0. 25 . E 100 is down by wait for the rest of the markets to getting gear. Euro stocks up 0. 2 . The spanish ibex up, the French Market up. On the fx markets, fairly flat on the pound. A little downside on the dollar. Lets talk about the sectors. 5050 up and down, maybe more biased to the upside. Financials in the green. Staples moved to the downside. The big picture moves in the individual stocks, interesting to start with the upside. You can see up by 6. 5 , a luxury name out of france. But beates slowed estimates. They missed their hong kong targets, but made up for that largely in other markets. That stock is really flying. Reportingdoing well ninemonth sales. Board up byators 5. 3 . They site improvement in north america and china. These are volatile sectors. By suppliers market is up 5. 5 . We have a host of earnings related moves coming through on the upside. Numbersownside, we have and i can see that particular stock down. Day in thes another red. Lets leave the stock specific there. Brexit. Ts get back to Boris Johnsons bid for an early election has been thrown into doubt. December, that is after Jeremy Corbyn said his backing depends on the length of the brexit delay granted by the European Union. That puts brussels in an awkward position. The eu is planning to delay its decision to avoid getting caught up in westminster politics. Joining us now is elsa lignos, managing director global head of fx strategy, rbc europe. What effect does this standoff have on the pound . Effect isinitial probably the wrong reaction, a kneejerk reaction which is negative on the uncertainty. How thehink about opposition is positioning, they are not willing to give into an early election until the threat of a node deal brexit is off the table. An election might not be necessary at all. I am assuming you mean johnson e boris elsa if you take out the no deal exit as a risk, which is peoples greatest worry, then you are left with conventional Market Reactions. They react well. Deal,you mentioned the no the trading around the euro, pound, and setting that against the odds of a no deal brexit. Elsa that is what is interesting to track the last few weeks. Part of the reason we have seen the strength in sterling is the probability of a no deal brexit coming down. Do you expect this to continue to strengthen sterling, and what is the range you are working with . Elsa i think we are well within that range at the moment. For a long time we were looking target, and we almost got there and are not far from there now. 1. 30 tothe downside, the top side is where we are in the range of outcomes. If we do not see Boris Johnson secure a deal through parliament and therefore we do not leave the eu, that is different. There has been talk around that that it could eat into the tories. How will the pound adjust to that . Will it make a corbyn Led Coalition slightly more likely . Elsa whatever outcome we get, it seems unlikely we will get a Strong Majority government. That should temper the more extreme in both parties. That is what keeps me less pessimistic on an election than some people are. It is what keeps me constructive on the pound. When you see drops like yesterday, it is an opportunity to buy into it. Matt one of the things you have seen recently is some dollar weakness. Do you see the euro pound getting weaker against the pound as you Pound Strength against the dollar . Elsa i think eurosterling and drivenso much of it is by the u. K. Side of things. Talkve had a lot more about whether the u. S. Growth story will come down to the rest of the world, but it is a much more interesting story Going Forward than the tight range we have seen so far. Anna elsa lignos, managing director global head of fx strategy, rbc europe stays with us on the program. , the stocks on the move. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are about 10 minutes into the trading day, and we want to get our top stocks stories with annmarie hordern. Annmarie we have had a host of earnings today, and we are seeing big moves. 9 this morning, sales did slow but they beat estimates. They see expansion and asiapacific and any loss in hong kong they were able to make up. 5 . Up nearly a rise in sales in the Third Quarter. This is their First Quarter of growth in a year. To the downside, ab inbev down year. E biggest drop in a they cut their profit view. Decline ofeing a shipments in the u. S. And china. For aBoris Johnsons bid december election has been thrown into doubt after Jeremy Corbyn said his backing depends on the length of a brexit delay granted by the European Union. Done isay to get brexit to be reasonable with parliament and say if they genuinely want thistime to study excellent deal, they can have it. But they have to agree to a general election on december 12. Take no deal off the table and we will support the election. This country needs one in order the issues. No deal must be taken off the table. Anna joining us now is sam gyimah, mp, house of commons. He changed party. Good to see you, thanks for joining us. If we see an extension from the European Union, will your party, the liberal democrats back the election on december 12 . Sam the key question is what the length of the extension is. He wants minister says an election on december 12, he is lobbying the European Union to grant the shortest possible extension. It is mixed signals from downing street. Our concern is that no deal is taken off the table because that without a reasonable extension the Prime Minister can take the country out of the eu without a deal. The broader picture is all of this is to distract from the fact that Boris Johnson failed to deliver brexit on october 31 do or die. We have a lot of next signals, chaos and confusion coming out of downing street because they do not want anyone to focus on his failure. Anna we have heard him say on a lot of occasions he would exit the eu on october 31. Sam that has not happened. Is untilthe extension january 31, does that constitute taking no deal off the table . Will you then back december 12 . Extension, it will have to be implemented. This is a Prime Minister who wrote three letters to the eu and one he did not sign for the extension. You want to see if that extension is it limited rather than granted by the eu but johnsons downing street finds a way to wriggle out of it. Anna what does implemented mean . Has got tovernment clearly accept that this is the extension, we are not leaving the eu on october 31. January 31 as the new deadline, and he is not doing anything to take the country out of the eu october 31. You have to get that assurance pretty clear. , and is another concern heard the Boris Johnson clip you played, this bizarre idea that parliament has to agree to an election on december 12, but also agree to pass his deal before that. I think his deal is a lousy deal , worse than theresa mays deal, which is why he does not want it up for parliamentary scrutiny. This means we accept a ridiculous timetable in which he will put a gun to parliaments had to get the deal through parliaments head to get the deal through. , if the the criteria government cannot take no deal off the table, and one of the front benches is saying that, if they cannot sam what do you mean they cannot . Anna we have heard them say it needs to be there as the fallback position if there is no deal. If they will not make that statement, will you never back and election . Sam the key point here is trust. There is no trust between parliament and the johnson government. This is the Prime Minister who prorogued parliament to deliver a no deal brexit illegally. Thingill be a cataclysmic , and a lot in Financial Services are listening. That is not a risk we are prepared to take. After october 31 we can discuss this more clearly. There is no trust with the johnson government to give him the benefit of the doubt that he will still not try to take us out on the 31st with no deal. The conservative partys interest is to do or die by the 31st. We do not believe that is the national interest, and why we and the extension secured implemented before we can discuss a general election. Anna is it possible because of what you have said and the lack of trust we end up with a position that will not back election anytime before it would before 2022, therefore we are in limbo until 2022 . Sam i think that is unlikely untilrliament will stall 2022. About Boris Johnson covering up for his failure. He has lost confidence and his supply partner. He failed in his essential mission, and why he is desperate for parliament to agree on his terms. Thee is nothing that says opposition has to agree to an election on his terms. There will be an election soon, but Boris Johnson will not dictate the terms. Anna sam gyimah, mp, house of commons. Thank you for joining us. Low Interest Rates and brexit will make it tougher to meet targets next year. The banks trade has outperformed in the fourth quarter. Our return in the Third Quarter was in double digits at 10. 2 and six of the last seven quarters we have generated capital of over 9 . We feel pretty good about the 9 target for 2019. What we are bringing up, as you look into 2020, you have the macro environment in the u. K. Where Economic Growth is muted. If we continue with the uncertainty of brexit, one has to think we will continue to have soft growth in the u. K. Also we have lower Interest Rates. That environment puts pressure on the banks interest margin and the probability of his deposit base. Given the current Interest Rate view across europe and the u. K. And in the u. S. As well, if we have economic softness, we caution against the 10 target for 2020, but we will maintain that target for now. Matt what do you expect in terms of brexit right now . Election inlcome an the sense that it could put an end to the uncertainty . Said over theave last couple days and weeks, but we are hoping for is an end to the uncertainty. I will not make a position from the bank whether it is this or that type of deal, but getting uncertainty behind us and allowing the Financial System and Banking System to execute with an idea of what the future will look like, that is important for the country. Thatne vote in parliament voted in favor of a deal that the European Union had been supportive of, that was a good step forward, but we have uncertainty that may lead to a general election, and we have to see how that plays out. The that was jes staley, ceo of barclays speaking to nejra cehic and myself earlier. Coming up, mario draghi says goodbye is the president of the European Central bank. What legacy does he leave behind . That conversation next. This is bloomberg. I have advice for christine, she knows better than anybody else what to do and say. For much of what i do next, just ask my wife. I focus on things that cannot be done, not things that you can change. Cannot change the past unless you are in the historian. This has been intense, profound, and fascinating. Proudre is one thing i am of, it is the way the governing council and myself have cons only pursued our mandate. This is part of our legacy. That was mario draghi speaking in his last ecb meeting as president. You cannot change the past unless you are an historian. Elsa lignos, managing director global head of fx strategy, rbc europe is still with us. Well historians see mario draghi as the savior of the euro . On whichreally depends country are background they are coming from. There will be people who see him that way. 2011 andink back to his first years, he did have uncertainty around the future of the euro to deal with. Think about where we are now, greece joined the club of negative yielding countries. We have come a long way in that sevenyear term. Anna it was quite touching, some of the press conference. He said he did not want to give any advice to Christine Lagarde. What are you expecting from Christine Lagarde . Where do you expect she will make her mark . Elsa she has close political relationships with france and germany. Her relationship with Angela Merkel is very good. That will be good for the future. As far as monetary policy, she is likely to be a consensus builder. Herhas talented people, chief economist and others. I do not think we will see any radical the parts are in terms of policy. Matt one of the things i noticed yesterday, draghi said unfortunately the surveys and data coming in since his last not onlyjustifies cutting rates lower, but also getting back into the bond buying program. How bad is the outlook in terms of Economic Growth in europe . Elsa it is not catastrophic, but if you have an inflation mandate and you are missing it, it is incumbent to do something. Think any of the hawks disagree they are missing their inflation target and they need to take that into account, but there is a lot of opposition. Anna elsa lignos, managing director global head of fx strategy, rbc europe stays with us. Up next, we are on central bank whats. Will the fed cut rates next week . We will look at what economists are expecting. Context around how hawkish the cut will be. This is bloomberg. Matt look at your top headlines for you off the terminal. Boris johnsons bid for a december election is thrown into doubt as Jeremy Corbyn demands no deal brexit is first ruled out. A warning from barclays. The Bank Confirms its profit targets but the ceo tells bloomberg the outlook will be a challenge. Given the current Interest Rate view across europe and the u. K. , the u. S. As well, if we have economic softness, we need to caution against a 10 target for 2020. Matt and same day shipping costs bite. Shares for amazon drop in late trading. Jeff says it is a longterm investment decision. Welcome to Bloomberg Markets. This is the european open. I am matt miller in frankfurt alongside anna edwards in london. Anna 30 minutes into the trading day, lets check out the European Equity markets. The moves are generally to the downside. 312 up, 275 going down. So fairly evenly split on equities today. Waiting for more clarity on trade. The political story in the u. K. Has taken on a limbo state. What is not a limbo is the fortunes of the luxury sector. There has been concern that hong kongs events would eat into profits but the updates are much more cheerful. 9. 7 showing they were challenged but managed to make it up elsewhere. Montclair is up by 6. 9 . Another business reporting Sales Numbers for the last nine months going better than anticipated. Up, bothx and wpp are giving positive sounds and not cutting any estimates or talking negatively about Global Growth enough to shore up those particular stories in the market. Lets move to the downside. Stunning moves lower. Byparticular, ubisoft down 20. 5 . United internet in germany is down by 17. 5 . Its a cut to the guidance that is the problem. Hauser bush anheuserbusch also down. Gemini is also down by 4. 8 . Lets get a first word news update in london. Boris johnsons bid for an early election has been thrown into doubt. Sayss after Jeremy Corbyn a backing depends on the length of a brexit delay granted by the European Union. Bloomberg understands the eu is planning to delay its decision to avoid getting caught up in westminster politics. Barclays is warning that low Interest Rates will make it tough to hit targets next year. Thats after a Bank Reported revenue for the Third Quarter beating the average estimates. Speaking to bloomberg, the ceo said 2020 would be more challenging than it appeared a year ago. Given the current Interest Rate across europe and the u. K. And the u. S. As well, if we have economic softness, we need to put some caution against the 10 target. , mikessing to the u. S. Pence has criticized chinas actions against protesters in hong kong. He is calling for greater engagement. Speaking in washington, hence told demonstrators in hong kong quote we stand with you. Hong kong is a living example when china happen embraces liberty. And yet, for the last two years, theyve and has increased intervention in actions to curtail the rights and liberties of its people. Hsbc is embarking on a fresh round of job cuts, targeting hundreds of employees in the middle east and north africa and turkey. It is the latest move in the ongoing Cost Reduction program. We are told the Global Banking and markets and commercial units may bear the brunt of the reduction which are due to start in november. Thousandoyees over 9. 5 fulltime staff in the region. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thanks so much. Expected to take a break from cutting rates next week. The majority of economists surveyed anticipate cuts of a quarter of a percent. It will be the third time they have reduced rates this year. The head of fx strategy at rbc europe is still with us. I mentioned the expectation we get a cut. But then there is the expectation that the message is communicated that this is three and done. What that your expectation . Im not sure they will be that explicit with the messaging. I expect a wait and see approach. I think that might be where we end up. Its interesting listening to the rhetoric that they see this as insurance cuts. The are still talking about 95 playbook and not as the start of a normal easing cycle. Matt how do you see the u. S. Economy . We have seen manufacturing slowdown. Has that spread across two services . Is the consumer starting to look weak . Elsa the consumer is not looking weak. Interestingly, if you look at the impact of last years tax cuts, a lot of that benefit has been saved. The consumer is in a strong position. Certainly, the weakness in Global Manufacturing and trade is having an effect on the u. S. But for the most part, theres a broad expectation that u. S. Growth remains quite close to trend. , and if that is the case in 2019 we saw outperformance by the u. S. Economy and outperformance and outperformance in relative Interest Rate stories by the thatand global weakness push the dollar higher. Do you see a continuation of that . That strong dollar move was wobbled in october. Elsa im glad you asked that question. It has been coming up a lot more recently in conversations with clients and investors. As we look to 2020, it is not so clearcut. You dont have the same strong u. S. Growth signals. Certainly, the rest of the world may not be as negative. But i dont think that is a negative dollars story, just quite neutral. To turn negative, you need some big surprises in the economy. Not seeing that yet. Matt one of the things i have did surprised about is eu not see gold running away once it got to 1500. In fact, it has lulled around this level even less. Why do you think gold has not been attractive to investors as we worry about a global slowdown and has rates are so low and so negative around the world . Elsa the worry is not as widespread as you might think. I was looking yesterday at year to date theres the sense that everything is bad. But if you look at the , four of the five top performance are highyielding em currencies and the fifth is the canadian dollar. And concern,orry it has not been too depressing an environment. Matt all right. The global head of fx strategy at rbc europe, thank you for joining us. Its been a pleasure. You are going to join us on Bloomberg Radio. Join me as well at 9 00 a. M. U. K. Time, 10 00 a. M. Here on the continent. You can get more by tuning in on london dab or online. You can get Bloomberg Radio anywhere in the world. Factor friday. Global equities are on track to end the week unchanged. But under the service, the most loved shares were pummeled. Here with the weeks moves is bloombergs dani burger. Dani what we saw this week in , ators is a continuation slowmotion continuation, of early september. That being that value gains out. The mirror opposite, momentum. The most love shares falling in favor of cheaper stock. This has to do with rates. They are highly correlated with the bond market. What we see in this factor breakdown might also be signs that growth momentum in the Global Markets is looking more positive. We see a lot of risky factors doing well. Even volatility gaining for the week. Signs that perhaps some positivity is coming back into the markets, despite some hiccups when you look at the wider index level. Bank of america says this action looks like a cycle that is turning from a downturn into an early stage cycle. They say that in that environment, what you want to do is add to our value portfolio over growth and momentum factors. They know this is the trickiest part of the cycle so expect volatility from here. Got calls from Morgan Stanleys saying there is likely to be a correction in momentum and low volatility and the correlation is very high. Ever corpulence same thing evercore, same thing. Anna amazons efforts to get packages from warehouse to doorstep in a single day has pushed the retail giant to its first profit decline since 2017. The cost of oneday delivery will total 1. 5 billion during the holiday quarter. Amazon shares slumped in extended trading as the projections for operating income estimates. Of analyst joining us for the latest is a bloomberg intelligences tech analyst. Lets start with amazon, shall we . Talk about what really disappointed here. Investing in growth for the future would seem to be a positive narrative. Thats right. Part of it is the scale of that investment and the lag. Big period for sales disappointed. And they said on the call that oneday delivery was driving better sales. Even on the core management, we are still trying to figure out how does oneday product is going to work. When there is uncertainty for when they are making that big dip in profits, people are wondering how to figure this out and what this means. Its a question of uncertainty. There are also issues about amazon web services. Still growing amazingly well, but softer than people thought. People see competition from microsoft and google. Perhaps a few more clouds on the horizon. Matt it does also see my people likedont remember seem people just dont member. Lets talk about intel. Why is that such a surprise . Intel worked at the hard end of the cloud market. There has been a lot of capacity in the market. People are starting to order server chips. They have surprised people in terms of how the volumes have held up. Their are selling more expensive versions of the chips. People have been worried about the kind of china trade issues. They seem to be punching through that. Generally, the momentum and the impact of the trade war just does not seem to be affecting intel the way they are affecting competitors. Anna and turning topline into bottom line. It looks like twitter is having some monetizations so what is going on there monetization issues must so what is going on there . Had to pullcally back on data they were sharing with advertisers about effectiveness of what they were showing to people. Those changes have basically meant that advertisers pulled back. Privacy issues are massive in the internet world and will only get worse. That raises some fresh questions not just for twitter but about what data you can share as a platform and what that will do Going Forward. It is a fresh issue for them to wonder about. Matt what is the story with nokia and 5g . Are they pulling out . How can you possibly do that . Not pulling out. In the shortterm, they have lost the early battles. Eric said has been much better positioned for those early upgrades to 5g. There is still an opportunity longerterm. They have a much stronger product lineup in the core network area. And what we are going to see over the next 34 years is operators massively upgrading core networks. They might suffer pain in the shortterm, but theres still an opportunity for them to recover market share. A more difficult time than they thought and there are Big Questions about why they have not been better positioned already for 5g given that we have been talking about this for five or seven years already. Matt thank you for joining us among met block some us, matt bloxum. Coming up, Mario Draghis next move. What is in store for the outgoing ecb president . We look back at his last meeting and legacy and talk about the future. This is bloomberg. I have no advice for christine. She knows better than anyone else what to do and what to say. For much of what im going to do. Ay is to just ask my wife past unlessange the you are a historian. This experience has been very intense, profound, and fascinating. If there is one in general thing im proud of, its the way the governing council and myself have constantly pursued our mandate. This is part of the legacy. Never give up. Matt that was mario draghi speaking after his final ecb meeting as president. Now is jeffries chief economist david owen. What did you think about draghis defense of the main criticisms . ,hey are that he had to go back could not normalize policy and has a very divided governing council. David absolutely. The focus will be on the fractured state of the governing council. The letter the Dutch Central Bank put on the website after the september decision was quite amazing and shows Christine Lagarde will have to come in and bring things back together. Its quite clear the governing council may be split on what happens next. But in terms of flows this year, we see a strong net buying of euros of equity. A muslim hundred 50 billion euros of italian debt. Euros of 150 billion italian debt. We have seen capital coming back to work in the eurozone and substantial volumes. Anna part of the reason for that is perhaps what mario draghi has done away from his direct mandate on inflation about saving the euro. We have this chart which is the future of the euro. This is the breakup index. You can see it has come down and down and down. A breakup of the euro has moved from the forefront of investors minds to very much a sideline, a niche issue. David brexit has actually made it less likely that any country wants to think about leaving the eu. Weve seen the whole thing coming together and the isrative of the eurozone moving into recession. When you drill into the data, bank lending is now very strong. And where lending has not picked up, there are particular problems in italy and spain. Netherlands, we have seen bank lending pickup and a strong housing market. You can see where some governing Council Members are coming from. Bundesbank,t the you are increasingly concerned about Financial Stability issues at negative rates. Eut in terms of leaving the , the u. K. Certainly has its own very unique Northern Ireland issue which other countries when i have to do with. Would not have to deal with. Bloomberg has done analysis and it shows that not only will ecb run out of bonds to buy at the end of next year, but over the next two years, there will be a 60 billion euro shortfall. Draghi did not seem too worried, though he reiterated that the ts selfimposed capital key is selfimposed. One issue with the program is that it is very opaque. It is not like the bank of england knows what bonds they have on the balance sheet. There is more paper out there to buy and they can raise the limit from 33 . That is something Christine Lagarde will be having many about. S about for they will have to fundamental decisions about where they go next. Clear, itis also very the eurozone surprise on the upside. We think the eurozone economy will surprise of the upside next year. We could see the end of policy quite quickly. Another thing Interest Rates are going up but that bond buying is coming to an end. Anna i have you Say Communications will change quite rightly so watch out for that. David owens, thanks very much. Up next, we bring you stocks on the move. Ubisoft, the company has fallen the most since 2013 after cutting forecasts. This is the paris listed game maker. This is bloomberg. Anna welcome back to the european open. Lets get an update on stocks on the move. Annmarie lots to choose from. Ubisoft is plunging down some 22 . They their targets and it is a major recess for the gaming company. 7 . Clair ticking higher up they defied concerns in hong kong and the Third Quarter had a bit of growth. Barclays is up 2. 7 . Corporate and Investment Banking beat the street, outperforming their wall street peers. Annmarie hordern with the latest on those movers from luxury to the Banking Sector to games makers and drink makers. We have seen a host of corporate reporter. Reporting. In the overall market, the stock market is down by. 2 one hour into the trading day. This is bloomberg. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Call, click, or visit a store today. Debate is thrown into doubt as Jeremy Corbyn demands no deal is ruled out first. Amazon shares drop as shipping target force a quarterly decline. Barclays conference its profit targets but the ceo warns that 2020 could have roadblocks. Given at the current Interest Rate view across europe and the we. And now in the u. S. , need to put some caution against a 10 target